Brian Armstrong, CEO Of Cryptocurrency Exchange Coinbase, Becomes A Billionaire
By
While
more than $600 billion of cryptocurrency wealth has been wiped out in
the last several months amid a market meltdown, the man who facilitates a
big chunk of the nation’s cryptocurrency trading has become a
billionaire.
In
late October, Brian Armstrong, the CEO of cryptocurrency exchange
operator Coinbase, oversaw a financing round in which the company he
cofounded raised $300 million at a valuation of $8 billion. At that
valuation, Armstrong’s stake in Coinbase is worth an estimated $1.3
billion, after applying a customary discount for privately held
companies. In January, Forbes had estimated that Armstrong’s net worth was between $900 million and $1 billion.
It
is possible that Armstrong’s personal cryptocurrency holdings have
taken a financial hit due to the plunging value of bitcoin, ether and
other cryptocurrencies over the last several months. Armstrong cofounded
Coinbase in 2012, and the company was so intertwined with the
cryptocurrency mania that followed that it even paid many of its
employees in bitcoin. Armstrong, 35, did not respond to requests for
comment for this article.
But
Coinbase, which is based in San Francisco, has continued to solidify
its position as the largest cryptocurrency exchange in the U.S. and post
eye-popping financial results. It has more than 20 million users, is
extremely profitable and will likely generate $1.3 billion of revenue this year.
With
those kind of numbers, Coinbase was able to attract Tiger Global
Management to lead its recent investment round, and other big names like
Wellington Management and Andreesen Horowitz also participated. To get a
sense of what has gone on at Coinbase in the last year, its last
investment round, which took place in August 2017, valued the firm at
$1.6 billion.
In the last year, Coinbase has been at the center of both the
boom and bust in cryptocurrencies. After Coinbase became the most
downloaded iPhone app for a short period in late 2017, its shares traded
on the secondary market at a valuation of $4.5 billion. It runs a
brokerage business, where retail customers can buy cryptocurrencies like
bitcoin or ether using a bank account, and an exchange, where traders
can make bids and offers on cryptocurrencies. Coinbase mostly makes
money on fees it charges its customers, so it has continued to do well
as the prices of cryptocurrencies plunged.
But Coinbase is
ultimately tied to the future performance of cryptocurrencies. Coinbase
claims it will use the $300 million it recently raised to expand global
links between fiat currencies and cryptocurrencies, and to add more
cryptocurrencies to its exchange. Coinbase is also working to attract
more financial institutions to cryptocurrency trading.
I am a senior editor
at Forbes who likes digging into Wall Street, hedge funds and private
equity firms, looking for both the good and the bad. I also focus on the
intersection of business and the law.
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